FOR IMMEDIATE RELEASE:
February 7, 2000
Attorney General J. Joseph Curran, Jr., announced today that his office’s Securities Division obtained a temporary restraining order against a 22-year-old Potomac man and his Bethesda-based company, charging them with operating a Ponzi scheme and using investor money for personal expenses, gifts to friends and payments to family members.
According to the order, issued by Montgomery County Circuit Court Judge Nelson W. Rupp, Jr., all assets of John St. Augustine McDonald and his two companies, Thornapple Capital and bringmefoodnow.com of 4835 Del Ray Ave., Bethesda, are temporarily frozen and a temporary receiver has been appointed to take control of the companies and assets.
Curran’s securities division alleges that McDonald violated Maryland’s securities laws by offering and selling unregistered investments to approximately 100 investors and by acting as an unregistered securities agent and investment adviser. The complaint alleges that investors thought they were putting money into limited partnerships so that McDonald could trade in stocks and options on their account. McDonald was to share in any profits, but investors would bear the losses.
According to the complaint, McDonald allegedly created fraudulent statements showing high rates of return to induce investors to keep their money in the program and to solicit more money for the program, when in fact, no profits were generated. When McDonald closed out the partnerships last fall, he induced investors to roll their investments into his start-up internet food delivery service and into publicly traded companies that he offered at below-market prices. It appears that most of the investment money was used for personal expenses, such as limousines, trips and gifts for friends and family.
"We had to bring a receivership action quickly in this case to protect investors’ monies," said General Curran. "By placing the companies and McDonald into receivership, we can trace the funds in this scheme and preserve the remaining assets for investors."
Curran emphasized that the Securities Division is continuing its investigation and urges anyone who invested funds with McDonald and his companies, or who has information concerning the investment program, to call the Securities Division of his office at (410) 576-6360.
Curran reminded investors to call the Securities Division before they invest to find out whether their investment adviser, broker and securities are registered. Even when an investment program looks reasonable, and friends and family trust the promoter, it’s better to take a few minutes to verify the status of the promoters.